Saturday, March 15, 2008

Stocks Plunge Again As U.S. Moves Closer To Economic Apocalypse

By MARC MCDONALD

A recent Wall Street Journal survey of economists proclaimed that the U.S. is now in a recession. The good news is that they're wrong. The bad news is that the U.S. economy is facing a meltdown far more serious than any recession.

But don't take my word for it. Consider the apocalyptic tone of this excerpt from the normally dry, bland prose of the Associated Press on Friday: "On the verge of a collapse that could have shaken the very foundations of the U.S. financial system, investment bank Bear Stearns Cos. was bailed out Friday by a rival and the federal government."

I suspect we'll be seeing a lot more apocalyptic language from the MSM in the coming weeks, as the U.S. economy starts to melt down.

And make no mistake, a catastrophic economic collapse is on the way. Such is the inevitable fate of any Ponzi scheme economy that has been running on nothing more than smoke and mirrors (and oceans of foreign capital) now for many years.

Of course, those who are poor or working class know first-hand that the U.S. economy has been in increasingly serious trouble since around 1980. Wages have been steadily declining for everyone but the very rich. And working class people now toil more hours for less pay than their counterparts in any other First World nation. (They have to, as a 40-hour workweek no longer is enough to put groceries on the table).

But as long as America had a tiny elite of prosperous super wealthy, we could always point to them and try to convince ourselves that our economy couldn't be all bad. After all, we would note, there are some people out there making a fortune. All it takes is hard work and ambition, right?

Today, with the stock market in the toilet, and the Fed having to step in to bail out the financial sector, it should be clear to anyone that the U.S. economy is in crisis.

If the U.S. economy actually produced anything of value, this would be nothing more than just another typical downturn in the economic cycle.

The problem is, the U.S. economy no longer produces anything of value. Our economic activity basically consists of importing trillions of dollars from central banks in East Asia---which we then use to prop up our Ponzi scheme economy. The ocean of foreign capital that flows into our nation daily is used to pay for the shopping habits of U.S. consumers.

In fact, in recent years, the Great American Consumer has been hailed by U.S. economists as the "locomotive" of the world economy. There was only one problem: U.S. consumers had zero savings and were depending on foreign capital to finance their shopping binges.

Now, with the stock market crisis and the ongoing housing mortgage crisis, nobody is in much of a mood to do any spending these days. And with the dollar rapidly declining, it's only a matter of time before the East Asian central banks start to unload their depreciating greenbacks (which will accelerate the dollar's fall even further in a vicious cycle).

The frightening thing is that East Asian central banks haven't even begun seriously dumping their dollars and yet the dollar is already plunging.

The key numbers which measure the current U.S. economic crisis are so far off the chart that it is difficult to even fathom them. As economics writer Eamonn Fingleton has noted, the U.S. current account deficit (the widest and most meaningful measure of our trade position) now represents an astounding 6.5 percent of our gross domestic product.

As Fingleton notes, only one other major nation has ever exceeded this figure: Italy in 1924. That was just before Benito Mussolini seized dictatorial power.

To anonymous: there are no easy answers to your question. Even simply holding cash isn't going to be a safe bet in the economic hard times ahead. I have read where a lot of the wealthy are putting their assets into gold, as well as other currencies besides the dollar. This is probably as good a course of action as any.

Thanks Marc, I was already feeling a little depressed this morning. It is obviously criminal what Bush & Company have done to America, our ideals not excluded but given the right leadership I have the untmost confidence in the resliance of the American spirit to turn things around. Congress is finally beginning to show a hint of having a backbone and the public is politically active at levels we have not seen in a very long time. There is "HOPE" on the Horizon but you are going to have to vote for it!

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About This Blog

Welcome to BeggarsCanBeChoosers.com, the progressive political blog of Marc McDonald. A Texas journalist, McDonald worked for 15 years for several newspapers, including the Fort Worth Star-Telegram, before he quit his day job and set up shop in cyberspace in 1995. McDonald's articles have appeared in a number of popular progressive Web sites, including Crooks and Liars, The Reaction, Buzzflash.com, Salon.com, OpEdNews.com, The Neil Rogers Show and The Raw Story. McDonald's Web articles have also been featured and reviewed by various national and international media, including CNN Headline News, the BBC, CBS, the Washington Post, USA Today and many more. On June 3, 2011, I was interviewed on the progressive radio program, "Voices at Work." Go here to hear my interview with host Ron Gonyea. I am always available for media interviews on progressive issues. Contact me here.